Lots of posts on expenses and inflation recently.
Anyway, I have records handy. Here is our 15 year spending history which includes every place our money went, discretionary and required, taxes and medical, donations and gifts....everything. Our expense history is different than most here, but I will give it anyway. By the way, our standard of living has not changed. I retired in mid 1998.

The spending in our last year of employment, 1998, totaled $57,831 plus $23,858 in federal income taxes...total $81,869

Average spending history in 5 year increments: Included are notes of our auto purchases because they are usually the highest expense category.
1998-2002 average $57,898 per year including 1999-2002 taxes (1 auto purchase in this period) (Taxes 1999-2002 totaled $14,829)
2003-2007 average $57,825 per year including taxes (1 auto purchase in this period) (Taxes 2003-2007 totaled $875)
2008-2012 average $65,981 per year including taxes (2 autos purchased in this period) (Taxes 2008-2012 totaled $1867)

Our spending last year, 2012, totaled $55,781 including taxes was less than during my last year of employment.
2013 will be quite higher because of 2 cruises reserved and a bathroom remodel.

Comment on our low federal taxes since retiring: That is thanks to our Roths and the planned elimination of most taxable investments prior to 2002.
Jim

People should not say everything they think. They should think about everything they say.

Expenses way down. Led by a 50% reduction in healthcare costs & not carrying a mortgage. Travel a bit more but we drive whenever feasible. I've been retired since I've been 48, 19 years ago. Discovered I have the ideal skill set for retirement. Life is good!!

I did not expect our expenses to fluctuate too much after retirement and so far I have been correct. We have more to spend and more time to spend it but still it keeps pretty steady even w/o inflation factored in. We just spend it on different items.

Part-Owner of Texas |
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“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

I will spend more as I now have more time to do things that I otherwise couldn't do while at work. I am not fully retired but happily have cut myself to a day a week. They used to talk about clothing expenses declining when you left the workforce but no more because work is business casual for most. Utilities go up because you are home more (if you live alone). But unless you are a big time traveler it probably doesn't matter much and is close. Taxes of course go down but so does earned income.

Three expenses changed a lot after I ERed in 2008. I saw my commutation expenses and FICA taxes disappear while my health insurance costs increased. Income taxes dropped a little bit. All of thses things roughly canceled each other out.

For this year we are definitely higher. I've been retired exactly 365 days. However, this year is not indicative of a regular year. We upgraded both our vehicles (from 8 years old to 3 years old for one and from 14 years old to 1 year old for the other) and took trips to Alaska and Europe. These trips are not annual events.

I would guess that year 2 of retirement will be substantially lower. The only additional cost we have is health insurance. That is substantially less than the 25% of salary we were saving.

Overall, my expenses are somewhat higher because of money spent on capital improvements with the home.
Our day-to-day expenses are down, but since I now have time on my hand I have been spending a lo of time and money on projects around the house that I was not able to get to before retiring.

I am relatively new retiree still in my go-go years. I was extremely frugal before retirement saving over half my income the last couple of years. Now that I am retired my goal is to spend it all while working through my bucket list. I spend 90% of my time away from home - may be it is time to sell the house.

Life is good when it follows your financial plan
or is it life is good when I follow my financial plan.

So most retirees don't own their house outright ? I assume most boogleheads do and this should then create much lower percentages. Our plan it to have the house paid off when I turn 60. A lot of times it makes me wonder if 30 year mortgages and tax deduction of mortgage interest are really a good thing for reaching long term saving goals.

We are maxing out both our 401-K's, paying for two kids in college, have 4 cars (one for each driver) and are killing off our mortgage before retirement with a 5-year term loan.
I can't imagine what would cost in retirement anything remotely close to that package deal. It would have to be some expensive prune juice.

I'm retiring at the end of the year. I expect my expenses for my first year will be unusually high, because I am relocating and I will be buying new furniture and a new computer. Who knows, though, for my second year of retirement and beyond.

gkaplan wrote:I'm retiring at the end of the year. I expect my expenses for my first year will be unusually high, because I am relocating and I will be buying new furniture and a new computer. Who knows, though, for my second year of retirement and beyond.

didn't change my lifestyle much, do somethings myself now e.g. lawn and saved on commuting expenses. Dine out a bit more, health care expenses may be more since I reached 65 and my company's revised plan and medicare probalby doesn't cover as much and no dental.

1. Paying for private health insurance.
2. Own two cars instead of one (had company car while working).
3. A bit more travel.

This brings to mind a pet peeve of mine - retirement planners that say you will spend some percentage (usually about 75%) of what you were spending while you were working. Worse yet - those who say you will need 75% of your income while you were working. I guess they assume that everyone spends 100% of their while working. In the last few years before retirement, for us, that number was closer to 40%.

I do this all the time for clients....and from this, a couple of points:

1. Many will not realize they are no longer paying FICA tax, cost sharing medical insurance or contributing to their retirement plan, because these expenses came out before they got their paycheck. IOW, although real, they just didn't 'feel' them. To get a better 'feel' for pre and post retirement household cash flow, it may sometimes be good to consider the change in discretionary expenses.

2. Large purchases, such as a class-A motorhome or a second home + insurance and maintenance, can skew this perceptions

3. For most who retire well under age 65, medical & Dental insurance can be the major expense they will recognize. Many will put this first, because they actually have to sit down and write a check for the premium each month, which often makes it seem like they are paying more.

4. Having children in college will also tend to skew this, as there is no longer a paycheck to use to at least partially pay the education expenses.

Put another way, going into retirement really creates two household cash flow changes: those I calculate and those the individual 'feels'. They are not always the same thing.

The day-to-day expenses do not change unless your life style changes. Just as before retirement the major expenses for most are food, shelter, and transportation. I prefer to prep my own healthy meals in retirement which saves a lot compared to my usual unhealthy restaurant choices. My largest new expenditure in retirement is travel. The good thing about retirement is having more time to find great deals. I have the same hobbies and spend a good deal of time doing things that are relatively inexpensive such as going to the gym, playing tennis, attending community social events. Beats me how I managed to fit a career in my life. What I appreciate most about retirement is the new flexibility in my life. I can live any where. I do not need a house. I am open to new experiences.

I have been retired for 22 years now and have found my expenses to be substantially less than pre retirement. No more professional licensing fees, insurance, association fees & dues, smaller home with lower property taxes, much lower gasoline and auto upkeep, lower utility bills due to smaller home, lower auto & home owners insurance. Lower income but lower income taxes as well, lower entertainment expenses. We own a 1,850 sq ft home free of mortgage, two paid for vehicles and no debt of any kind. One credit card paid off each billing cycle. Our biggest expense now is travel and recreation which takes over 50 % of our income. LOVE IT!!